The rupee traded in a narrow range and settled for the day 2 paise higher at 82.82 (provisional) against the US dollar on Tuesday, amid a muted trend in domestic equities.
Forex traders said the strength of the American currency capped sharp gains for the local unit.
At the interbank foreign exchange market, the local unit opened at 82.82 against the US currency and witnessed a high of 82.76 and a low of 82.84 during intra-day trade.
The local unit settled at 82.82 (provisional), registering a gain of 2 paise over its previous close.
On Monday, the rupee closed at 82.84 against the US currency.
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The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.32 per cent to 103.52.
Global oil benchmark Brent crude futures fell 0.03 per cent to $75.97 per barrel.
The rupee traded with a slight positive bias on positive domestic equities and FII inflows. However, positive US dollar capped sharp gains, Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas, said.
Dollar gained on optimism over debt ceiling talks and hawkish statements from US Federal Reserve officials.
"We expect the rupee to trade with a negative bias on risk-off sentiments in global markets amid uncertainty over the debt ceiling talks and a strong dollar.
"... we expect USD-INR pair to trade in between 82.40 to 83.30 in the near-term," Choudhary said.
On the domestic equity market front, the 30-share BSE Sensex advanced 18.11 points or 0.03 per cent to end at 61,981.79 points, and the broader NSE Nifty rose 33.60 points or 0.18 per cent to 18,348.00 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Monday as they purchased shares worth ₹922.89 crore, according to exchange data.